Need suggestions for getting a mortgage loan?

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My fiance and I are trying to get a loan for a house. We have already signed a purchase agreement with 3,000 down. We have tried 2 banks and 1 personal finacing company. They say they can’t help us because his credit score is only 552. He had collections which he has payed off were just waiting for them to take them off his account. (The debt collectors have submitted a letter to request it be taken off his account. They were only 2 medical bills and 2 verizon) We haven’t had any established credit since 2009. Every payment on that loan were payed on time. We need to raise our score 68pts in order to get a loan. We just don’t know how to go about it and to get it up as fast as possible. We are at our wits ends and ready to give up. We really want this home and have excellent credit refrences but nobody will give us a chance. Anybody please give suggestions! This is very discouraging!
I don’t know if it will help but we offered 37,000 on the house and we are willing to put another 3,000 down if it will help us get a loan. So we only need a loan for about 31,000. The listing price is 35,000. There are 2 other parties involved and have also put in a bid. They will decide what offer they want on feb. 14th and if the choose our offer we have until may to secure a mortgage loan. No rude comments please.. we made some mistakes and now are trying to fix it and have a home for our family.
We talked to FHA and they have given us an option to get a loan. Thanks to everyone who offered help and we wern’t stupid. Our 3K is protected and if we can’t get a loan or they don’t accept us we get it back.

6 Comments
  1. Reply
    My Take on It
    May 4, 2011 at 3:49 am

    You are NOT going to qualify for a mortgage. Period. Why a realtor or even a for sale by owner would let you write a contract without a pre approval letter showing you qualified for a home loan is beyond me.

    Even with paying off these deragatory items and having them removed (if that even happens, hopefully you got that promise in writing) you two have NOT re established any credit. That is what would help get your credit score to improve. But it is NOT an overnight venture. It would take about 18 mos at the very least of on time payments on a secured credit card (you won’t qualify for an unsecured one) before you would even be considered. Paying on a Verizon cell phone bill does NOT help your credit score. Only time cell phone bills are reported to your credit report is when you default!

    The only way you could pull this off is if the owner of this house does owner financing for you or you can get them to do a lease option for 12 to 36 mos which would give you time to re establish your credit and get your score up to where you could get a mortgage.

    Otherwise, it isn’t going to happen. Hopefully you put a contingency in the contract that you could get your 3k back if you couldn’t obtain financing.

  2. Reply
    stan c
    May 4, 2011 at 4:03 am

    Your best solution is to contact a mortgage broker and see what they can do for you. If you can wait another 12 months get a $ 500 scored credit card from a bank. Make sure they belong to the credit bureau. Use it for gas and small items and pay the balance the following month. It usually goes up between 5 to 10% per month.

  3. Reply
    Frank Castle
    May 4, 2011 at 4:05 am

    I suggest you to apply for a few credit cards (Just don’t use them yet)

    This will increase your credit lines but not your debt which is good for your credit score.

    Let me know your current debt/line ratio

  4. Reply
    Rebecca
    May 4, 2011 at 4:25 am

    Don’t be a fool and take the advice you have been given by MY TAKE, you will NOT get this home if there is another person bidding against you.

    Can you qualify for the loan on your own? If so then leave his name out of it and see what happens.

    You have skipped another VITAL part of purchasing a home with someone you have not legal relationship with and that is an Atty to draw up a contract with excruating details about what happens when you do not get married for 6 months and 7 months from now you aren’t even together and fighting over who gets what. YES it happens just read a little around here and you will see how often.

    Lesson number 2, collection agencies do not write letters they simply go in and change their own records with the bureaus so it would be almost instantaneous. I am assuming they are a member since they put the negative there to begin with. Just something to think about.

    Now you go right ahead and thumbs down this too but reality is simply reality and you 2 need to face it!

    Added FRANK is an idiot one NEVER, EVER applies for credit when they are trying to get a mortgage.

    And in case you are fool enough to follow all these spam you are getting that would be lesson 3 you pay them a nonrefundabel UPFRONT fee for the PROMISE of finding you a loan and they can’t but they got your money

  5. Reply
    bloomorningglory
    May 4, 2011 at 4:54 am

    I wouldn’t be surprised if your score went up 68 points plus just by having all of the collections removed from his report. That’s only one issue though. Another issue is that most mortgage lenders like to see at least 3 credit lines that are open and in good standing that you’ve had for at least 12 months. It sounds like you may have one loan that fits this criteria. Some lenders will work around that if you can prove you paid your utilities, cell phone, etc on time for 12 months. That is getting harder and harder to find, though. In the short term I don’t think there’s anything you can do but sit and wait for those collections to come off.

    If this home/loan fails, look into getting a secured credit card or two for him. Then check his credit in about 6 months (use MyFico.com.. will give you the scores lenders use). Then if you see his credit scores both being 620 or above, get preapproval from a lender or preferably mortgage broker before you even put an offer in.

    Hopefully on this offer, if you used the $ 3000 for earnest money, the offer was contingent on getting financing. If your realtor didn’t recommend contingencies, you may be out $ 3k.

    Don’t worry. If this home falls through, there’s a good chance you’ll find something just as good or even better. Plus you’ll be on more solid ground financially speaking. It be the best thing in the end. I know looking for a home and getting financed is a nerve wracking experience but stick with it. It’s so worth it in the end after all the ups and downs.

  6. Reply
    Dan B
    May 4, 2011 at 5:45 am

    You are doing it backwards. You could lose your $ 3000 if your offer is accepted and you can’t get the financing.

    I would withdraw my offer and protect that $ 3000.

    You should get pre-approved for a loan BEFORE you go shopping for a home. Then do nothing to change your credit profile (like opening a line of credit or a credit card account). Then you’ll know what you can afford, and your financing will be in place. What you are doing is jumping into the water without knowing how deep the water is.

    Don’t get too emotionally attached to that home. You don’t have it yet and most likely you won’t get it with your circumstances (low score, no financing in place yet). Also, even if you got his score to 620, you won’t get a very good interest rate.

    How is your credit score? Maybe you can qualify on your own credit. If you do, his name must not be on the mortgage documents or the deed for legal implications I won’t go into here.

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